Many investors out there are smarting as the popular darlings which drove the markets to a speculative frenzy have come off the top.
We’re actually doing fine with our more UK-centric concentration – it’s the US tech influence which has left many with bloody noses and suddenly realising the game may be over. Indeed, since the end of December, whilst the FTSE100 has risen, the Nasdaq has fallen almost 15%. Some of our exposures have been affected – such as certain smaller company trusts, though in many instances they are simply cheaper to buy now (at bigger discounts to their asset values) rather than having the wrong components within. We had been trimming-down many profitable holdings too and private equity which had done very well. If you are not with us – check what has happened to yours!
We are pleased again to know we have outpaced the main ‘cheap’ indices in this rout, despite us having to charge a small management fee for doing the job too. As traditional ‘value’ investors it is curious too how over a period we find we have gravitated towards particular sectors as the value compels us (and the same ‘away’ from an area too). It’s not an overnight decision but as we see value, so often that is endorsed by other similar opportunities for which we must make space.
Over the last few years, commercial property REITs have been taking a bigger proportion of our money. There is such a range available and they hit many of our sweet spots – good dividend yields (some not far from 10%) from tenants’ rents, suppressed post-pandemic values of their vast property assets (most are not shops either), real underlying assets and usefully, shares in them still priced at deep discounts to the underlying valuations too. We’ve already done very nicely but of course, written-down property values are notching upwards again, dragging asset values with them.
It’s the same sort of reason we were filling our boots with supermarket shares (including Morrisons, which gave us a great profit on its take-out) and also the banks though in each ‘sector’, still at most maybe 10-15% of total assets may have such individual ‘flavour’ but what a difference it can make, especially when other things are falling from their silly levels.
What else? We have been adding miners which concentrate on precious metals – and our first direct foray into real silver. This is for two reasons – safety and it’s good value (especially compared to gold with a very wide historic valuation differential at the moment), but also something not linked to ‘shares’ and something to preserve values on any major shake-out and indeed perhaps to rise as paper falls.
